Nobel Economist Reveals Why Economic Models Keep Failing Us, ft. Richard Thaler

Capitalisn't

University of Chicago Podcast Network

Stigler Center, Chicago Booth, Socialism, Antitrust, University Of Chicago Podcast Network, Growth, 087667, Policy, Monopoly, Professors, Distortion, Research, Competition, Capitalisnt, Inequality, Promarket, Politics, Policymaking, Special Interest, Economics, Efficiency, Regulations, Chicago, Business, Markets, University Of Chicago, Kate Waldock, Capitalism, Friction, Bethany Mclean, Government, Macroeconomics, News, Education, Waldock, Georgetown, Microeconomics, Luigi Zingales, Zingales, Finance, Ucpn

4.5 • 584 Ratings

🗓️ 30 October 2025

⏱️ 46 minutes

🔗️ Recording | iTunes | RSS

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Summary

Standard economic theory informs how we think about business strategy and the economy and presumes that people are selfish, have well-defined preferences, and consistently make welfare-maximizing choices. In other words, we are rational. But what if that is not the case? Nobel Prize-winning economist Richard Thaler is out with an updated edition of his bestselling 1991 book, "The Winner's Curse: Paradoxes and Anomalies of Economic Life." In the new edition, he and his co-author Alex Imas (both professors at the University of Chicago Booth School of Business) reflect on the last thirty years of behavioral economics and how it makes sense of tensions between our psychological biases and impulses that make us less than fully rational in practice. Using a wealth of empirical evidence, the authors explore the behavioral anomalies that contradict the expectations of standard economic theory and explain a wide range of real-world examples from banking crises to social media addiction. Earlier this month, Thaler joined Bethany and Luigi for a sold-out Capitalisn’t recording in front of a live audience in Chicago to walk through the anomalies of human behavior that have endured from biblical times to the age of Big Tech. Thaler reflects on how views and the adoption of behavioral economics have changed over the last thirty years, both within academia and beyond (wonder why you can’t put down your phone? Silicon Valley has read Thaler). He also shares how behavioral economics can influence public policy from canceling “junk fees” and dubious subscriptions to deciding which parts of the Affordable Care Act to keep and which are unlikely to produce their desired outcomes. Over conversation, light banter, and audience Q&A, Thaler shares his views on the state of capitalism and reveals how there is no grand unified theory of human behavior that incorporates all its irrationalities—only departures from the standard model.

Transcript

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0:00.0	You're saying that we're all humans and humans are irrational.
0:04.0	I don't use the word irrational.
0:07.0	I would say that we're human and we don't behave according to the models that economists write down and call rational.
0:17.0	I'm Bethany McLean.
0:20.0	Did you ever have a moment of doubt about capitalism and whether greed's a good idea?
0:25.7	And I'm Luigi Zengalis. We have socialism for the very rich, rugged individualism for the poor.
0:32.6	And this is Capital Isn't, a podcast about what is working in capitalism.
0:36.5	First of all, tell me, is there some
0:38.8	society you know that doesn't run on greed? And most importantly, what isn't? We ought to do better
0:43.9	by the people that get left behind. I don't think we shouldn't kill the capital system in the process.
0:49.2	This episode comes to you from a special live taping at the academic home of our podcast, the Stigler Center, where we interviewed one of the most famous living economists.
0:59.0	We were lucky enough to be joined onstage by none other than Nobel Prize winner Richard Thaler, whose groundbreaking work helped launch the field of behavioral economics.
1:08.0	Behavioral economics has completely changed the way scholars, experts, and even
1:12.5	lawmakers think about how real human behavior, messy, emotional, and often irrational, shapes markets,
1:19.2	policy, and power. At a time when our politics is fraying, tech companies are changing the rules of the
1:24.7	game and the economy feels on edge, Th Taylor's ideas seem more urgent than ever.
1:30.0	In this conversation, he reflects on the limits of traditional economics,
1:34.3	the power of small policy nudges, and what it really takes to build systems that work for real people,
1:40.6	not just the rational actors that exist in economic papers.
1:52.0	Thank you. real people, not just the rational actors that exist in economic papers. You've argued that the impact of your work has been more limited than it should be, that, quote,
1:57.0	mainstream economic textbooks remain firmly anchored in the standard neoclassical framework,
2:02.6	and that when behavioral economics does sneak its way into economics textbooks,
	...

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